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Home ownership is not only a personal milestone - it also means financial and physical security for your family. Let's look at how you can own your home sooner.
Home ownership is not only a personal milestone - it also means financial and physical security for your family. It's only natural, then, that you would want to pay your mortgage off as swiftly as possible.
Home buyers employ a variety of strategies to pay off their home loans quicker, from increasing the size and frequency of their repayments to refinancing to get a better interest rate and / or lower fees. One strategy that is not as often discussed is leveraging an investment property to pay it off.
There is a range of methods one can take to use property investment to pay off a mortgage. But key to all of them is structuring your debt appropriately.
If paying off your home mortgage is your chief focus, then it doesn't make sense to pay principal and interest on both properties - particularly when you can get tax benefits for interest payments on your investment property.
Rather, it might be a smarter plan to set your investment property up through an interest-only loan, giving you a smaller sum of repayments to deal with each month. You can then also claim the interest you pay on the investment property as a tax deduction.
In the meantime, turning your piece of investment real estate into a cash flow positive property can help you chip even more away from your mortgage. While you continue paying off the interest on your asset, the rental income you receive from it can be put toward paying extra off your home mortgage. The more of the principal you pay off, the less you'll pay on interest too, reducing your monthly repayments.
Eventually, if you've chosen an investment property in an area that is set for growth, you can decide to sell it. Whatever profit you make can also be put toward paying down your home mortgage - or, depending on your financial situation and long-term goals, expanding your portfolio.
You can also claim the interest you pay on the investment property as a tax deduction.
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